Lockheed Martin Q3 Earnings Call Transcript

Lockheed Martin Corporation (LMT)
Q3 2008 Earnings Call Transcript
October 21, 2008 11:00 a.m. ET

Executives

Jerry Kircher – Vice President, Investor Relations
Bruce L. Tanner –Executive Vice President & Chief Financial Officer

Analysts

Troy Lahr – Stifel Nicolaus & Co.
Robert Spingarn – Credit Suisse
David Strauss – UBS
Cai von Rumohr – Cowen & Co., LLC
Joe Nadol – JPMorgan
Robert Stallard – Macquarie Research Equities
Heidi Wood – Morgan Stanley
Richard Safran – Goldman Sachs
Carter Copeland – Barclays Capital
Ronald Epstein – Merrill Lynch & Co., Inc.
Doug Harned – Sanford C. Bernstein
Howard Rubel – Jefferies & Co.
Myles Walton – Oppenheimer & Co.
Harry Nourse – Banc of America Securities

Presentation

Operator

Good day and welcome everyone to the Lockheed Martin Corporation’s third quarter 2008 earnings conference call. Today''s call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Jerry Kircher, Vice President of Investor Relations. Please go ahead, sir.

Jerry Kircher

Thank you Teresa and good morning everyone. I''d like to welcome you to our third quarter 2008 earnings conference call. Joining me today on the call is Bruce Tanner, our Chief Financial Officer and Executive Vice President.

I would like to remind you that statements made in today''s call that are not historical facts are considered forward-looking statements and are made pursuant to the Safe Harbor provisions of federal securities law. Actual results may differ. Please see today''s press release and our SEC filings for a description of some of the factors that may cause actual results to vary materially from anticipated results. We have posted charts on our website, which supplement our comments today, including details of the financial outlooks by business area for both calendar years 2008 and 2009.

With that, I would like to turn the call over to Bruce.

Bruce L. Tanner

Thanks Jerry. Good morning, everyone, and welcome to the call. In this period of market turbulence I appreciate your support and interest in Lockheed Martin as we continue to execute on our strong portfolio of programs.

I would like to begin by stating that we had a solid third quarter with strong operational and financial contributions from each of our four business areas. Our results reflect excellent performance across the Corporation and are enabling us to continue our momentum as we work to provide value to shareholders and customers.

Before I move into specific details of the third quarter accomplishments and performance, I want to offer a brief perspective on how the Corporation is positioned within the financial environment as well as an assessment of the recently approved FY09 defense budget.

At an operational level we continue to see minimal effects to our activities from the current financial environment. With the vast majority of our revenues being funded by the U.S. government, we are fortunate to have a relatively insulated market position. Support from our subcontractor and supplier base remains solid and we continue to have access to required raw materials to enable execution of programs. Our liquidity position remains strong with $2.5 billion of available cash on the balance sheet at the end of the third quarter.

Our cash and short-term investments provide excellent liquidity for the Corporation and we have also focused on safety and liquidity over yields in our deployment of assets. We remain on track to generate cash consistent with net earnings further demonstrating our long-established excellence in cash generation.

In the area of debt we have no commercial paper outstanding or required. Our $3.8 billion in outstanding debt consist entirely of fixed-rate instruments that represent a low capital leverage ratio of 28%. Looking forward, we have less than $250 million in scheduled debt retirements from now through 2012 and we continue to have adequate access to both short- and long-term debt markets.